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GXG Battles For Smaller Company Listings

European smaller companies looking for a stock market listing in London are spoilt for choice these days. The Alternative Investment Market (Aim), the London Stock Exchange’s junior market, is staging something of a recovery after years in the doldrums, while the purchase of Plus Markets by ICAP two years ago – it has since renamed the marketplace as the ICAP Securities and Derivatives Exchange – secured the future of an exchange that has been a competitor for Aim for many years, despite the demise of its parent company.

Now a third competitor is stepping up its efforts to vie for smaller companies’ affections. Unlike Aim and ISDX, GXG Markets is not a UK-authorised stock exchange – it’s a European Regulated Market in the official jargon – but it is working hard to increase its share of business in London, Europe’s leading financial centre.

That effort is taking place on a couple of fronts. Most significantly, GXG has just unveiled a deal with Proquote, the broker trading system that the London Stock Exchange uses, to develop a link that gives brokers direct access to its markets.

In time, this will make it much easier for brokers to deal on the market on behalf of their clients – and therefore improve liquidity. It should also ensure that smaller companies with listings on GXG are able to offer British investors access to the same tax breaks that are available through other exchanges – including eligibility for tax-free individual savings accounts.

The second prong of GXG’s development work is an overhaul of the rules by which companies must abide in order to list on the exchange – including new criteria on how many shareholders firms must have, how much of the company they must sell, and the financial information they may disclose.

GXG hopes these efforts will result in both an increase in investor interest in the companies already on the market and a jump in the number of companies that choose to list with it.

The exchange already boasts just over 100 smaller company members across it two sections. Its First Quote platform is aimed at the smallest companies and has less exacting listing requirements than the Main Quote platform, designed for more established businesses. So far this year, businesses have raised just over £15m on the market.

GXG Markets, whose parent company is Swedish, doesn’t see itself as a British exchange, though a number of its constituent companies are based in the country and it has offices in London. Instead, it hopes to pitch itself as the leading pan-European marketplace for smaller companies – and, like the London Stock Exchange’s Aim, it is increasingly attracting businesses from elsewhere in the world too

Simon Kiero-Watson, GXG’s head of markets, says the exchange is particularly excited about its tie-up with Proquote. “It has become clear that trading under the current system has its difficulties for our adviser and broker members as they cannot always access the market as quickly as they might wish on occasions,” he concedes. “This latest development will overcome that problem and enable our adviser and broker members easier access to our markets.”

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